Tuesday, September 27, 2011

Some Brief Economics Concerning Mexican Immigration

     Giovanni Peri, in an economic report compiled for the Migration Policy Institute, found that “Immigration unambiguously improves employment, productivity, and income, but this involves adjustments.  These adjustments are more difficult during downturns…”[1]  So, we are currently in one of these economic downturns but immigration (legal and illegal) still show positive gains for the US economy.  In the short run, we will see slightly negative impacts on portions of the domestic economy.  For the first two years of an immigrant’s stay in the US, (legal or illegal), the effects on native employment are slightly negative; some native citizens will lose their jobs.  The four and seven year results show positive effects however; new jobs are created and more native citizens have jobs than before the immigration occurred.  
     In addition to the positive long-run implications of migration, it is also important to point out that people should be allowed to “vote with their feet” in order to promote social, economic and political change in their home countries.  Voting with our feet is an important aspect of the Political Economy of the US and is a key element of all capitalist democracies.  It has been shown to improve efficiency in autocratic societies as well. This is because migration solves market inefficiencies by allowing labor markets to move towards equilibrium.  
     The first thing to understand when analyzing the effects of migration is to understand the cycle of migration flows.  Migration is dependent on labor markets; labor will flow to where there is the most demand for labor.  In this case labor flows from Mexico to the US.  The demand for labor is higher in the US when the economy is prospering and likewise the demand for labor goes down when the economy is retracting.  This is important to understand because it shows another discontinuity in the logic of the anti-immigration argument.  If migration is lower during the economic downturns than it is during the times of prosperity, why does the anti-immigration sentiment grow when we are in an economic downturn?  The market self-regulates this imbalance without the need of government intervention.  Government intervention in the market where there is no market failure is discontinuous with the logic of market capitalism, and it is ironic that the argument is being made when migration is at its low points.  Aside from the problems of logic that this data poses for anti-immigration arguments, the economic data from 1994 through 2009 suggests that rises in the net immigration rate has a statistically significant correlation with a rise in the domestic employment rate. What is most interesting about this data is that when illegal immigration is controlled for (as a variable in the multiple-regression analysis performed by Peri) there is no correlation at all between the effects of immigration on the employment rate.  This suggests that illegal immigration may be the cause of the economic benefits that net immigration brings to the domestic employment rate. 
     Now that we have looked at the supply-side concerns of migrant labor, we should look at the demand-side concerns as well.  Capital demands labor for the production of agricultural, industrial and service goods.  The means of production are diversified among these different sectors of the market and therefore the demand is not determined by any unified voice amongst Capital, but is rather determined by the market itself.  This is because, as Samers points out, the market for migrant labor depends “upon product markets, the productivity and intensity of labour power, the organization of production and the ability to substitute native workers, the cost and levels of technical innovation, wage rates, [and] social welfare costs.”[2]  The context of Samers argument was the arrangement and effects of migration on the individual state economies of the EU, but the economic principle still applies.  The massive capital accumulation in the US provides a fertile market for labor.  The macroeconomic policies of the US and Mexico have only served to fuel the migration of Mexican workers to the US in search of jobs.  NAFTA and IMF reforms imposed on Mexico as part of a process of opening the Mexican economy has had a wide array of unintended consequences.  While NAFTA and economic reforms have shown improvements in the Mexican and US economies since their inception, they have at the same time relaxed the controls over the US/Mexican border, increased the volume of traffic that crosses the border, and narcoticized large portions of the Mexican agricultural economy.[3]  The Mexican State, pre-NAFTA, supported its agricultural sector with subsidies that allowed them to compete with a much more technologically advanced US agricultural sector.  Under the new free trade agreement and the economic restructuring of the IMF, these subsidies were retracted.  This had two primary results; (1) native-Mexican agriculture laborers moved to find new opportunities for work to the US, and (2) large agricultural lands were converted to the farming of Marijuana.[3]  Markets respond to incentives and these programs, although unintentionally, incentivized these two responses.  Not only has NAFTA contributed to the narcoticization of the Mexican agricultural sector, but it has increased the cross-border traffic between the US and Mexico which has facilitated the ease of transporting all types of contraband; drugs, guns and even people across the border. 
    The point is, that immigration is good for the US economy; period.  The arguments that make wild claims about the "evils of illegals" are a product of our own ineffective foreign policy decisions, and the arguments about the negative implications for our economy are simply unfounded.  The most recent Republican debate had a lot of conversation about what to do about "all this illegal immigration" and who was being soft and who would be tough on it.  Undoubtedly, everyone wanted to be seen as tough on it.  There was even mention of building that ever elusive fence along the border...Can we really afford that right now? Ah, but that is a topic for a later date.....

1: Giovanni Peri. Immigration Policy Center. (2010 йил 8-January). Immigration Policy Center: American Immigration Council. Retrieved 2010 November from
2: Michael Samers.  ‘Globalization’, the Geopolitical Economy of Migration and the ’Spatial Vent’.  1999.  P.172.
3: Peter Andreas.  The Illicit Global Economy & State Power.  P. 125-141.


  1. Great write-up! You've exposed me to some aspects of the dialogue that I had not yet considered or was unaware of. Particularly interesting are the statistics about immigration actually creating MORE domestic jobs in the long run. Thanks for the crash course!

  2. comment by Chris Ray

    It wouldn't let me post a comment, but here goes: Indeed, an exploration of the relationship between immigration and job creation is intriguing; is it simply a matter of creating a new domestic consumer base, or is there something else at work? While I don't necessarily think you'll agree with much of what he says, Robert W. Cox explored the phenomenon of lawlessness in groups, such as immigrants, who haven't recourse to the law in The Political Economy of a Plural World. Since they exist outside the law as is, it is difficult if not impossible for them to seek legal redress or act as "responsible citizens," resulting in the sorts of problems (and costs) you'd expect to emerge. Also, the problem of narcotization seems to ask us the question whether or not increased free transit and trade would also require increasing social and economic synchronization (and whether or not that's a good thing). For several reasons, the continued illegality of marijuana seems like a poor test case since the correct answer is so blindingly obvious; nonetheless, it seems like a fertile question, especially when considering the law of unintended consequences. Comment by Chris Ray

  3. Chris, I moved your comment over to the blog, If thats not okay, let me know and I'll delete it. I'll have to check into what's going on with the comment form and why its not working!

    I believe that there is an interesting interplay between the creation of a new consumer base and a new labor supply, both of which I see as a benefit to the economy; trade makes everyone better off after all. If it didn't, people wouldn't trade, whether for labor or any other good or service. I also think that the inability of illegal immigrants to seek redress for crimes against them and the subsequent lack of incentive to act as responsible citizens is one of the central problems with the current immigration laws that govern their access to the US. As Scholte argued, the respatialization of social geography is occurring in ways that we can not fully understand nor predict and this does indeed elicit several questions of theoretic importance concerning the increase of (or lack thereof) social and economic synchronization. My argument concerning US/Mexican migration is that we do a poor job of incorporation, in all respects, which is one of the causes for the negative unintended consequences of their migration to the US. The EU has set up an interesting framework to ease labor mobility amongst its members. Though a regional trade agreement is quite different than a monetary union, I think it is none-the-less an important framework to think about as the lines between physical borders continue to be blurred.

    Thanks for the great comment, and I will definitely check out Robert Cox! Do you know the name of the book or article where he discusses this?